Jan. 13, 2006 at 9:00 AM ET
When is a free cell phone not really a free cell phone? When it's a free cell phone after rebate. And that rebate application can't even be filed for 180 days. And the rebate doesn't come for 10-12 weeks. And if you submit the rebate application either before 180 days or after 210 days, you're out of luck.
“Free” cell phone purchases at Wirefly.com, perhaps the largest independent online cell phone retailer, start with that dizzying array of requirements. But the Internet and the Better Business Bureau are both awash in complaints that Wirefly isn't even following its own already-tortuous rules. Consumers accuse the firm of intentionally frustrating their attempts to get rebates; the company answers that complainers are a loud minority of its customers.
Rebate red tape is nothing new. We all know the game. Companies advertise incredibly low prices, enhanced by rebates, knowing full well many consumers won't follow through with the paperwork. Throttling the amount of rebates through bureaucracy -- and thereby increasing the amount of money the company keeps -- is an art form. The more complicated the process, the more money the company keeps. The industry has terms for this, like breakage and slippage.
But at Wirefly.com, rebate hurdles may have reached a new zenith.
Consumers have only a 30-day window to mail in their rebate applications -- between 180 days and 210 days after the purchase. And even if they nail that window correctly, the firm still finds ways to deny the claims, some consumers say.
Wirefly is no small enigma –- it’s owned by publicly traded InPhonic Inc. (INPC), which says it sold 850,000 cell phones last year. Sixty percent of its phones are sold with rebates attached, the company says. In addition to Wirefly, InPhonic operates some 6,000 other private label cell phone sales Web sites, according to company spokesman Tripp Donnelly. The Washington, D.C.-based firm says it’s the largest third-party online cell phone retailer, accounting for one-third of the market. It has received a number of Internet accolades and was named one of Forbes magazine's Best of the Web for 2004.
But it's also one of the most complained-about companies at the Washington, D.C., Better Business Bureau, according to spokesman Ed Johnson. More than 1,400 people have filed complaints about the company in the past three years, and in November, InPhonic's BBB membership was revoked.
'They just talk in circles'
Marie Vento, 53, is one consumer still waiting for her rebates. The Staten Island, N.Y., resident said she purchased two Motorola phones for $600 back in February -- and expected to get $600 back in rebates. She dutifully marked her calendar so she wouldn't forget, then assembled six months of bills, and on Oct. 10 sent them off to InPhonics' processing center in Bear Lake, Minn. A month later, she received a rejection, with a note saying the bills sent did not include an "invoice bill date." She sent an e-mail complaint and never got a response. She called and says an operator told her to simply send in the first page of her monthly bills, this time to a different processing center in Arizona. She did so and received another rejection letter in December. She called again, asking for an explanation, and says she couldn't get a straight answer.
"I sent them everything," Vento said. "When I ask them to explain, they just talk in circles. They answer your questions with a question," she said. "Now they are asking for something that is not there, a six-digit number that starts with a P."
Vento said she didn’t understand the strict 180- to 210-day rebate application window when she purchased her phone; only after the phone arrived did she see those terms. But Donnelly said the terms are clearly spelled out on the Wirefly Web site.
Where are those terms?
A visit to the Wirefly Web site reveals that the company is currently selling the popular Motorola RAZR phone, with the word “FREE” in red type, near the top of the page. Near the bottom of the page are the words “After rebate, this item is free,” also in red. Undearneath that, in a font half the size, are the words “$70.00 Mail-in Rebate.”
The words are underlined and hyperlinked; clicking on them opens a new window with the rebate terms. At the bottom of that window, in smaller type, are the words “your rebate submission must be completed with all the requested information and postmarked no earlier than 180 days and no later than 210 days.” The picture to the left shows how the disclosure is linked.
Donnelly said such disclosure formats are routine for the industry.
Moreover, both Donnelly and the firm's attorney Walter Leach deny the company is intentionally making rebates hard to get. Donnelly said the company has thousands of satisfied customers, many who have no trouble getting their rebates. But he wouldn't disclose how many rebate applications the firm has denied -- saying that was industry practice.
He did say the company proactively monitors Internet complaints and attempts to satisfy customers who say their rebates are being held at bay. Only a few hundred legitimate complaints have been posted on various Web sites, Donnelly said, and the firm is proactively contacting those customers to clear up the confusion.
Attempts to shut down complaint site
But in one case, the company is trying to shut down a naysayer’s Web site. Wirefly-rebate.com, a bulletin board initiated by a dissatisfied Wirefly customer, has been sued by InPhonics for trademark infringement.
Jehad Edwan, who posted the site, says Wirefly owes him two rebates. Leach says one of Edwan's rebates was denied because the forms were filled out incorrectly, and the other has been "processed." Edwan says he still hasn’t received anything.
Edwan's attorney, Bassel El-Kasaby, said his client has a First Amendment right to express his opinions about Wirefly.
"Obviously, something is going on with their rebates," El-Kasaby said. "This is a company that promises incredible rebates but obviously seems to be having a hard time fulfilling these promises."
InPhonics' stock is having a hard time lately. It has fallen from about $25 a share this time last year to about $9 this week.
Still, Donnelly says the company is on track. He also says Marie Vento’s rebate is on track. A customer service agent called her Thursday morning to say it was approved for processing -– several hours before MSNBC.com called Wirefly asking for about her situation, Donnelly insists.
To get your rebates
To keep your rebates on track, one good piece of advice is to avoid such purchases altogether –- or just make the purchase not expecting you’ll ever see the money. Be realistic with yourself and your ability to finish off paperwork. But if you must, fill out the forms as soon as you get home, or as soon as you can, while the papers are still in front of you and the money is on your mind. Then, use your Palm Pilot, Microsoft Outlook or wall calendar to note when you expect to receive the check –- otherwise you might forget about it and forget to complain when it doesn’t arrive. Also, favor companies like Staples that have moved to much simpler rebate processes, that only require consumers to enter a number on their sales receipt into a Web site page.
Finally, be careful with your mail. Rebate checks often look like junk mail. It’s a crying shame to toss out your money after you’ve done all that other work.